We use cookies to make sure our website better meets your expectations.
You can adjust your web browser's settings to stop accepting cookies. For further information, read our cookie policy.
SEARCH
IN Warsaw
Exchange Rates
Warsaw Stock Exchange - Indices
The Warsaw Voice » Business » December 19, 2013
Business & Economy
You have to be logged in to use the ReadSpeaker utility and listen to a text. It's free-of-charge. Just log in to the site or register if you are not registered user yet.
Giant Petrochemical Plant in the Pipeline
December 19, 2013   
Article's tools:
Print

Polish fuel giant Lotos and fertilizer producer Azoty have announced plans to build a zl.12 billion petrochemical plant by the end of the decade to reduce their reliance on imported chemical products. The project could give a boost to the entire Polish economy.

The Lotos group and the Azoty group signed an agreement in December to establish a special-purpose company to carry out a detailed feasibility study for the planned petrochemical plant.
The two companies also signed a preliminary agreement with state investment vehicle Polskie Inwestycje Rozwojowe, to help finance the project. Polskie Inwestycje Rozwojowe provides mezzanine financing, a hybrid of debt and equity financing, in infrastructure projects.

Once the feasibility study is ready, the two companies will decide whether or not they should go ahead with the project. The decision is likely to be made some time during 2014. If they secure the necessary financing, the complex will be built between 2016 and 2018, and be launched in 2019.

The project is expected to help reduce Poland’s deficit in the trade of chemicals and create anywhere between 5,000 and 7,000 new jobs during the construction of the complex and a further 2,000 or so after it is put to use.

The products made by the plant would be used for the needs of the Azoty group, but could also be sold abroad.

Paweł Olechnowicz, CEO of Grupa Lotos SA, said, “This agreement marks another step in the development of Lotos under its Effectiveness and Development program for the 2013-2015 period. Together with Grupa Azoty and Polskie Inwestycje Rozwojowe, we want to create a link connecting the Polish refinery and chemical industries, which will have a direct impact on the country’s further economic growth.”

Paweł Jarczewski, CEO of Grupa Azoty, said the project is of paramount importance for the economy because the chemicals sector attracts many potential investors. He added that the project could turn Gdańsk into a third chemicals industry hub in Europe, after Ludwigshafen (the headquarters of the BASF corporation) and Antwerp. The project is also important for the construction industry, Jarczewski said, adding that up to 5,000 workers could be directly hired during the construction project.

The construction of a petrochemical plant is a major project comparable to the construction of a new refinery, experts say. It is expected to cost twice as much as Grupa Lotos’s 10+ Program carried out between 2007 and 2011.

A number of options for securing financing for the zl.12 billion project are being considered. In addition to using financial support from the state investment vehicle PIR, Lotos and Azoty will probably have to borrow money from banks and possibly enlist a foreign partner. Yet another option is that the special-purpose company will hit the stock exchange to help raise funds.

The list of potential investors for the petrochemical plant planned by Lotos and Azoty is open, according to the CEOs of the two companies. “A partner with technology and a market would be the most interesting from our point of view,” said Olechnowicz. “The question is whether such a partner will fit into the project and whether his expectations will match ours.”

The Lotos and Azoty project has attracted the interest of Polskie Inwestycje Rozwojowe, a company that was established under the government’s Polish Investment Program and that aims to provide financing for promising long-term infrastructure projects in Poland. “At this stage, we assess the project as very interesting,” said Mariusz Grendowicz, CEO of Polskie Inwestycje Rozwojowe. “Polskie Inwestycje Rozwojowe has been established to work on such projects. That is why I am pleased that we will be able to assess this ambitious plan from the perspective of a financial investor. If the results of the feasibility study are positive in terms of profitability and risk assessment, we will sit down for detailed talks with Lotos and Azoty on the terms of the future transaction. Polskie Inwestycje Rozwojowe can become involved in the project to the tune of zl.750 million.”

The project is expected to help improve Poland’s foreign trade balance and increase export opportunities for high-margin chemical products. Poland currently imports considerable quantities of chemical products, and its trade balance in this area in 2012 showed a deficit of zl.16.7 billion. In turn, Polish refineries have a surplus of so-called light fractions derived from crude oil processing, including crude gasoline and LPG, which are a perfect raw material for petrochemical production. The project is expected to benefit the entire economy, and the two companies will be able to diversify their production and revenue by expanding their range of products to include new high-margin products.
© The Warsaw Voice 2010-2013
E-mail Marketing Powered by SARE